#1195 – Entertainment Investment and Change!

Developments in the Entertainment Space

M&A continues to see action in leisure entertainment – investors are looking at the entertainment facility and resort sectors as an opportunity for growth and investment, while at the same time the impacts of the financial conditions globally continue to be felt, seeing major restructurings, layoffs, and mergers to consolidate debts.

Following our previous report, and the US scene was witness in the New Year to the announcement that the newly rebranded Elevate Entertainment Group (EEG) had acquired three of the ‘Paragon Theater’ and ‘Penny Lane’ locations. EEG, the “Cinetainment” operation, announced the acquisition in January, with news that these sites will be fully branded under their EVO Entertainment brand by the beginning of May. EEG operates the ‘EVO Cinema’, ‘EVO Entertainment’, ‘Elevate Rewards’, ‘Violet Crown’ and ‘ShowBiz Cinema’ chains. The group has been on a buying spree, recently seeing the October announcement of the acquisition of Violet Crown Cinema operation, along with other sites. Founded in 2014, EEG has amassed nearly some 20 cinema entertainment venues, rebranding from EVO Entertainment to EEG in 2022.

It was revealed in February that owners of the entertainment operation GameTime had signed an agreement to acquire the iTZ Family & Fun facility operation. The two venues comprise more than 400 amusement pieces, along with bowling lanes and food and beverage support. Currently comprising six venues in their chain, GameTime will include the new operations into their group and look to applying many of the successful elements currently found at their sites. E-payment and branding are just some of the new aspects that will be applied to the iTZ operation.

Developments in the amusement and attraction scene are also reflecting the M&A conditions. It was confirmed, following information from well-placed sources, that VR entertainment system developer MajorMega had signed an agreement with Bay Tek Entertainment. The amusement designer and manufacturer is acquiring the VR operation and taking on the manufacturing and representation of their ‘Hyperdeck’ and ‘SpongeBob SquarePants: Dynamic Duo’ platforms. The Bay Tek corporation is no stranger to VR platforms, having previously signed an agreement with BoxblasterVR to develop and represent their ‘Gold and Mace’ single-player VR redemption piece.

As previously covered, the conclusion of the move by Cineplex to sell their Player One Amusement Group (P1AG) was concluded in February with the confirmation that OpenGate Capital had completed the purchase of the group for a reported total price of $155m in a cash transaction. As originally rumored, the sale will still see P1AG supporting selected Cineplex locations with amusement maintenance and machine support for a period. The new owner, in a press statement, confirmed they will be making strategic investments in the company’s people, infrastructure, deployable assets, and systems, to enable P1AG to better serve existing and new customers. It is, however, expected that major restructuring will be taking place with the group now under its new ownership. This move, now concluded, will have ramifications throughout the North American amusement distribution sector.

Another major entertainment and theme park operation looking at rebranding their business is SeaWorld Entertainment –announcing in January their move to change the operation’s name to United Parks & Resorts, effective from mid-February. The move comes as the operation undergoes restructuring and the core values of their offering are re-evaluated. The move is stated to unite the company’s portfolio under a brand better reflecting their focus. But also, the need to create a brand that has limited baggage – the SeaWorld operation was previously rocked by news exposures regarding their treatment of wildlife in their care. This rebranding will be reflected across the portfolio of 13 entertainment operations (although some sites will retain their original names), as well as a New York Stock Exchange stock ticker change.

Concerning wider M&A developments, in the retail and electronics sector the announcement was made that Walmart, the vast retail empire, would be acquiring TV manufacturer Vizio for a staggering $2.3b. This move was fuelled not just by the opportunity to enter the electronics business with their own line, but more importantly to acquire the ‘SmartCast’ operating system that Vizio had developed, towards a new investment in customer engagement and market promotion. It is expected that this deal will see the smart OS incorporated into ‘Walmart Connect’, and future advertising hubs planned from the retail giant. This is a new way to communicate with customers, which all retail and entertainment will be now considering.

Spatial Computing Pivot

Investment in Augmented Reality (AR) continues, following the interest generated during CES’24 – the AR developer Xreal was able to raise some $60m from investors towards establishing their ‘Air 2 Ultra’ range of AR glasses. The Chinese company had previously been branded NREAL and had been embroiled in a legal spat with Magic Leap – but following the collapse of the operation and change in business plan, by ML, to enterprise, the newly rebranded Xreal has reinvested itself. In the face of the interest in the ‘Apple Vision Pro’, the company has added new investment to their $300m raised to date.

The plans revealed during CES’24 announced they will be going toe-to-toe with the Apple MR platform, announcing the development of their ‘Xreal Air 2 Ultra’ for Spring, as a direct competitor to the Apple entrant at a far lower price. This news follows the announcement of new investment in Magic Leap by their Saudi owners, to also re-enter the consumer AR landscape. The launch of the expensive ‘Apple Vision Pro’ garnered much media interest during February, although clearly was perceived as an expensive prosumer tech-gadget by many.

While many manufacturers pivot to support a MR/AR future, the continued restructuring of VR interest from electronic manufactures continues apace. After HP closed its VR interest, and Samsung abandoned their VR headset plans for a new joint MR project with Google, it was announced that Panasonic had sold off its VR hardware subsidiary Shiftall. The operation is developing an ultra-thin VR headset concept (called the ‘MeganeX’) and, although launched in limited numbers, the system has failed to penetrate the market – that said, they had promoted a new version during CES’24. It was announced in a statement from Panasonic that they had sold the VR subsidiary to Japanese operation Creek & River. There was no word if Panasonic would continue interests in VR, or even MR projects, at this point.

The entry of Apple into the MR space caused such a flurry of activity from the previous VR headset manufacturers scene. One such example was seeing the head of Meta actually taking to social media to promote that their ‘Meta Quest 3’ VR headset was better on several aspects than the Apple system. Claims of better hand tracking, no motion blur and a wider game-based selection of apps – as well as a lighter formfactor and being only a seventh of the price. Many were surprised that the Meta head would need to be so obvious in promoting their platform, even suggesting that the omission of eye-tracking on their hardware would be “brought back in the future” on their next planned hardware release; as if playing catch-up on the new Apple entry after years of complacency. Meta is attempting to claim to be the “open model” for MR development, even in face of previous walled-garden style activities in the VR space from the social media giant.

The benefits of competition were proven only ten days after the Apple launch, with the news that Meta had broken its complacency and revealed, by their CTO of Meta Reality Labs, they would be reworking their user-interface (UI) to offer a better MR experience – mirroring the much-praised Vision Pro UI. This on top of Meta confirming their VR headset would be able to view spatial images recorded on Apple iPhones like the Vision Pro. The Meta team is accused by those on social media of rushing to address the less than rave reception to their new Quest 3 headset. This comes on the back of a statement from a Ubisoft executive, that the publisher was disappointed with the sales to date of their ‘Assassins Creed VR’ Quest 3 AAA launch title – suggesting missing sales expectations on this VR hardware.

Impact of Restructuring on Entertainment

Regarding the consumer game scene, we reported on the shakeups within SEGA Corporation in Japan, owned by SEGA Sammy. And regarding the US operation, and their consumer game business, restructuring was revealed there as well. It was reported by media that SEGA of America was in the process of laying off some 61 employees reflecting ten-percent of their workforce.

Following in the wake of news surrounding the shuttering of previous high profile LBE and FEC installations – such as Kidzania London, and Two Bit Circus Dallas – it was revealed that lasertag, bowling, and arcade venue ‘The Zone’ in Virginia (at the Loudoun Station mall) will be permanently closing – having first opened the entertainment space in 2014. The news, last September, revealed that the site had closed its doors, but it was also revealed in February that operators now had permanently shuttered the venue and were in negotiations with the site mall owners regarding repurposing the space.

Speaking of Two Bit Circus, the company was also in the news regarding their support of a new Open Source amusement cabinet platform project. The DIY Artcade operation is launching a cabinet tooled for deployment in schools and small businesses. The brainchild of Strange Outfit, the system is also seeing support from Intel and Dassault Systemes. The platform offers a chance for Indie game development to be monetized through cabinet income, as well as offering a launchpad for innovation.

London saw the closure of the ‘Tomb Raider: The Live Experience’, developed by the Little Lion Entertainment operation, after eight-months of operation following its April 2022 opening. The live action adventure has IP based on the popular computer game and movie property. No word if this closure came on the back of attendance reaction or other circumstances. Little Lion is famous for its ‘Crystal Maze: Live Experience’, which is based on a popular gameshow property, and establishes much of the puzzle adventure experience with a gamemaster, that would be the first to define the escape gaming business. Little Lion is also involved in developing their MR racing experience ‘Chaos Karts’.

London has also been a powerhouse for new immersive experiences – such as seen with the success achieved by the “Immersive Performance” experience ‘ABBA Voyage’. The temporary structure holographic performance has wowed the capital’s crowds – employing holographic capture of the actual performers from the supergroup and created into a live stage event through the development of Industrial Light & Magic (ILM) and Pophouse. The success of the experience is seeing it go on tour to other world capitals, taking its purpose-built temporary structure along.

Taking their experience from creating the ‘Gunpowder Plot’ and ‘War of The Worlds’ immersive experiences – marrying holographic motion capture with immersive story telling – developers Layered Reality announced they had achieved a license, from the estate of Elvis Presley, to be part of their ‘Elvis Evolution’ show. More than just a digital holographic recreation of the superstar supported by AI, the experience will use multi-sensory and immersive storytelling to place the audience into the “blue suede shoes” of the legend, telling his story. Planned to open by Q4 of 2024 in a London location, plans will also see a rollout of the concept in Tokyo, Las Vegas, and Berlin. Following the successful Oscar nominated biopic of the star’s life, and a planned film release concerning his wife, the leverage of this IP linked to an immersive experience is expected to be intense.

The immersive event business has been gaining momentum and the investment community is supporting this move – it was announced that Liminal Space has secured $2m in funding to develop their spatial LED display technology for immersive attractions. The technology has been described as virtual reality-like, without the need for headsets to experience. This technology is important in the development of immersive live events and experiences, and defines the move away from more encumbered immersive technology for an audience-based approach.

In the final aspect of this M&A series entering the new year, and just before the year started, it was revealed that one of the major 2023 merger announcements was in jeopardy. It was revealed by Reuters that a leading investor in Cedar Fair had voiced concerns in the immanent merger. The deal was placed in jeopardy with the news that the investor had sent an official letter to the corporation regarding the $8b planned merger with Six Flags Entertainment. The complaint from a veteran investor owning 3-percent of Cedar Fair, surrounds the removal of shareholders from the planned board following the merger, without holding a shareholder’s vote. It is expected that the corporations will need now to enter a period of arbitration to address the complaints, to move forward with the plans.

Theme Park Investment

The theme parks sector has seen a major upheaval in business over the last few months – all fuelled by new investments, mergers and acquisitions, and the need to develop properties towards capitalizing on a growth in visitation from an audience looking at leisure entertainment in a new light.

This growth of investment has been best illustrated through the actions of Universal Studios, who have been actively working to define their presence in the market. Recently, we have seen the corporation repurchasing the ‘PortaVentura’ operation – while at the same time, announcing the development in expanding Orlando property,

Texas (‘Universal Kids Park’), Las Vegas (‘Universal Horror Unleashed’), and even online (‘Minecraft x Universal Studios’). But again, in Europe, it was the news that the Universal Destination and Experiences division had confirmed to local media their moves in the UK, being those which have caused the most interest. With the purchase of the domain ‘Universal Studios Great Britan’ and the revealing of initial sketches, the corporation confirmed their early plans to develop a new theme park resort in the UK in Bedford, North of London.

The company has purchased an up-to-500-acre parcel of land (speculation being that 240-acres will be developed initially for the resort), for some $217m on acquiring land for future theme park developments. Speculation is rife, as official confirmation of internal plans have yet to be publicly revealed. The new park is expected to focus on UK IP and has been speculated for a 2030 schedule opening.

This news comes as a death knell of the Dartford-located troubled plans from London Resort Group. The operation behind the original ‘Paramount London’ theme park, then reverted to ‘London Resort’ after numerous upheavals and changes in management and partners. Most recently, the operation filed for ‘Company Voluntary Administration’ (CVA), with debts of some $100m. The situation was compounded with the news, at the end-of-the-year, regarding the reality of those involved with the abortive project. It was revealed that the Kuwaiti tycoon behind the concept had declared bankruptcy – al-Humaidi group, the key investor group, and previous owner of property in the area including the proposed Ebbfleet park land, as well as Ebbfleet United Football Club (through KEH Sports). The key supporter of the project, some 12-years though, had removed themselves from the London Resort board following recent developments. Influential in encouraging previous investment, their position will underline the futility of moving forward with this concept.

The land acquired by Universal was considered by the original design team behind the failed ‘Paramount London’ phase over ten years ago. Along with the filing of the CVA, it was revealed that previous partner Paramount was suing London Resort Company Holding (LRCH) regarding a claimed “unfair” irregularity concerning the restructuring of LRCH. The calls for the UK Conservative government to strip the London Resort project of its awarded status as a ‘Nationally Significant Infrastructure Project’ (NSIP), that had been intended to act as a fast-track towards development, have seen the project languish.

Regarding the IP interests for these film studios, leaks regarding discussions between Warner Bros. Discovery and Paramount Global were underway, regarding a possible merger. Alhough at an early stage and with information still based on well-placed sources, we expect an official statement soon, that could also include plans for a major restructuring in both operation’s park and resort businesses. Warner operates their own attraction in London (‘Warner Bros. Studio Tour London – The Making of Harry Potter’). This comes as other rumors suggested Skydance was also in discussions to acquire controlling shares in Paramount, owned by Comcast.

Just as went to the wire with this report, news broke that Paramount Global was restructuring its operation. Sources confirmed that the corporation was undertaking major layoffs of workers across the corporation. This latest round of layoffs is expected to see up-to-1,000 departures, across virtually every division, and for the first time the ‘CNBC News’ media team will be impacted, suggesting the start of a media industry wide round of job layoffs. How much of this restructuring is to prepare for possible acquisition or merger is yet to be seen.